Doctrine of Territorial Nexus

The Doctrine of Territorial Nexus, rooted in Article 245 of the Indian Constitution, allows state legislatures to make laws with extra-territorial effects if a real and substantial connection exists between the state and the subject matter of the legislation. 

Salient Features of Doctrine of Territorial Nexus

1. As per this doctrine, the State’s legislature may make laws for the entire state or for any part of it.
2. The state legislature cannot adopt extraterritorial legislation unless there is a significant connection or nexus between the state and the object.
3. This doctrine governs the taxation of non-residents in India.

Landmark Case Laws of Doctrine of Territorial Nexus

1. In A.H. Wadia v. Income Tax Commissioner (1948), the Bombay High Court held that a question of extraterritoriality of enactment can never be raised against a Supreme Legislative Authority on the grounds of questioning its validity.

2. In State of Bombay v. RMDC (1952), the Supreme Court held that there existed a sufficient Territorial Nexus to enable the Bombay Legislature to tax the respondent as all the activities which the competitor is ordinarily expected to undertake took place mostly within Bombay.